We’re going to be discussing the recession and what it means to us as individuals and a society over the next several days.  It seemed like the best way to kick off this conversation was by positing the titular question and getting a grip on what this whole economic downturn thing really means in terms of actual impacts.

Here we are, stuck right in the midst of a recession.  Now what?  What happens during a recession, really?  Understanding the various definitions of the term “recession” (and I think we’re meeting all of them these days) let’s us know where we are, but it doesn’t really help to explain what’s going to happen to us on a real level.  The link between reductions in the GDP and what’s happening in your neck of the woods (or on TV for that matter) isn’t allows easy to spot.

Here’s a quick rundown of some of the things that happen during recessions.  

First, unemployment increases.  This is probably the most obvious impact of a prolonged economic downturn.  In recessions, we’re producing less.  That reduced output requires less labor.  Recessions also tend to put people into a “savings mode” where they spend less, reducing demand for products, which further decreases the need for workers.  Companies struggling to stay profitable and/or afloat will also look at payroll cuts in the form of layoffs or firings as one way to decrease their expenditures.  It’s a nasty little circle, with which negative consequence feeding another.  

Second, the stock market takes a dive.  It’s not hard to figure out why that happens, is it?  Companies are selling less and making less money.  That doesn’t make their stock an attractive investment.  Worries about job and income stability encourage people to become more conservative with their money.  They save instead of purchasing stock or making other, higher-risk investments.  It’s another ugly loop.  People invest less, which drives the market down.  People see the market going down and become even less likely to invest.  

Third, interest rates sink.  The Fed tries to abbreviate the downturn by making capital more readily available to those who could use it to make purchases and longer-term investments.  The hope is that the lower rates will encourage the kind of spending that might begin to right the lilting economic ship.

Fourth, people go absolutely nuts.  During a recession, one may wonder if the doors to a million asylums were kicked open or if some enemy of the state dumped some mind-altering substance into the drinking water.  

Politicians seem to manifest the symptoms of recession looniness first.  They use the downturn as an excuse to pont the finger at rivals for power.  They leverage fear and concern to support their own agendas.  They take bizarre positions on the farthest ends of both political poles.  

The craziness extends to the rest of the population.  Encouraged by media personalities and the above-referenced politicos who have a twisted need to whip people into a frenzy, millions begin to quickly smell conspiracy and develop a thirst for the blood of anyone they can even link remotely to the overall state of the economy.

 Throughout the whirlwind of rants, polemics and fabrications, no one seems to take even a modicum of personal responsibility for the situation.

Okay, the last one is my take on the situation.  The first three, on the other hand are accepted widely as results common to most recessions.